Toyota projects first operating loss since 1941 (6:59 a.m.)

NAGOYA, Japan (AP) — Toyota Motor Corp. projected its first-ever operating loss since it began such reports, acknowledging today that its nine-year stretch of global vehicle-sales growth had stalled.

NAGOYA, Japan (AP) — Toyota Motor Corp. projected its first-ever operating loss since it began such reports, acknowledging today that its nine-year stretch of global vehicle-sales growth had stalled.

Crashing auto demand, especially in its key U.S. market, and the profit erosion from a surging yen proved too much for Japan’s top automaker, which had been booming on the success of its fuel-efficient models, including the Camry sedan and Prius gas-electric hybrid.

Gloom dominated the annual news conference by Toyota’s president, who in recent years had outlined ambitious expansion plans. This year, Toyota President Katsuaki Watanabe even refused to give a worldwide vehicle sales goal for 2009.

“The tough times are hitting us far faster, wider and deeper than expected,” he told reporters at Toyota’s Nagoya office. “This is an unprecedented crisis requiring urgent action.”

Watanabe also blamed the strong yen, which has risen to 13-year highs against the dollar to about 90 yen recently.

Toyota lowered its net profit forecast to just 50 billion yen ($555 million) for the year through March 2009 — a tiny fraction of the 1.7 trillion yen it earned the previous fiscal year.

Toyota expects to lose money on an operating basis of 150 billion yen ($1.66 billion) for the fiscal year ending March 2009. Toyota has never reported an operating loss since it began giving such figures in 1941. The only such loss it has had is an internal calculation for the year ending March 1938, a year after the company was founded.

Operating income reflects a company’s core business performance. Last fiscal year, Toyota had a whopping operating profit of 2.27 trillion yen.

Toyota also lowered the number of vehicles it expects to sell globally this calendar year to 8.96 million, down 4 percent from a year ago. Earlier this year, Toyota had expected to sell 9.5 million vehicles around the world in 2008.

Initially, it had an even more aggressive target of 9.85 million, and expectations had been growing that the tally would reach 10 million in coming years — allowing Toyota to dethrone General Motors Corp. as the world’s top automaker.

Watanabe vowed Toyota would grow so lean it would realize profitability even if its worldwide sales slid to as low as 7 million vehicles — what he called the basic “bottom line” for Toyota.

“We must change to become more slim, muscular and flexible,” he said.

Tsuyoshi Mochimaru, auto analyst for Barclays Capital in Tokyo, warned worse may be ahead. U.S. auto sales won’t start recovering until toward the end of 2009, and the dollar may lag further, he added.

“The problem is next year,” said Mochimaru. “It’s unmistakable that things are extremely tough for Toyota.”

Watanabe and other executives said production plans and other investment will be on hold, including a new plant in the southern U.S. state of Mississippi and expansion plans in India.

The automaker will focus on hybrids and small cars, and invest in ecological technology to prepare for long-term growth, they said.

Mitsuo Kinoshita, a Toyota executive, said he hoped the results for the fiscal year through March would mark a bottom, partly with the help of dropping material prices. Soaring prices of steel and oil had hurt automakers, but such costs have fallen back in recent months.

But unfavorable currency shifts will slash 200 billion yen ($2.2 billion) from its results for the fiscal year through March, while marketing activities, including measures to deal with sinking sales, trimmed another 570 billion yen ($6.3 billion), according to Toyota.

While Japan’s automakers are in far better financial shape than their cash-strapped American counterparts, the global slowdown is hitting them hard.

At a similar news conference last week, Takeo Fukui, president of No. 2 Japan automaker Honda Motor Co., also lowered profit and sales forecasts and declined to give a vehicle sales goal for 2009.

Toyota said it will reduce temporary workers at its Japan plants to about 3,000 by March from an earlier 6,000. Full-time employees will have job security.

Toyota is a relatively old-style Japanese company that offers lifetime employment, and only in recent years has hired and let go of temporary workers to adjust production. It was reviewing overseas jobs but had not reached a decision, it said.

Monday marks the second time Toyota reduced its forecast. Initially, it had projected 1.25 trillion yen ($13.9 billion) in net profit for the year through March 2009, but last month lowered that to 550 billion yen ($6.1 billion). It lowered its fiscal sales forecast to 21.5 trillion yen ($239 billion), down about 18 percent on year.

Toyota’s U.S. vehicles sales plunged by a third on year in November, when overall sales fell to their lowest level in more than 26 years. And there is little hope for a quick fix as consumers hold back big purchases amid a credit crunch, rising unemployment and fears about the future.

“The change that has hit the world economy is of a critical scale that comes once in a hundred years,” Watanabe said.